U.K. research indicates growing interest in home equity release

According to a survey of homeowners situated in the United Kingdom, 22% of current workers plan on using the value of their home to fund their retirement, stemming from record home price increases observed in the country. This is according to new research by Legal & General Home Finance (LGHF), an investment manager for corporate pension plans in the U.K.

One-third of all non-retirees (35%) have less than £10,000 (approximately $13,700 USD) in their pension account but own a property, the study indicates.

“The average homeowner in England and Wales could access £72,988 (approximately $100,000 USD) in equity release based on analysis of median house prices, which could greatly improve the retirement of the 70% of over 65s who are ‘state pension dependent’ but are also homeowners,” the results read.

The additional consideration is likely fueled by a documented 24% increase in the prices of homes in England and Wales since 2016, the results explain, likely leading more people to consider alternative financing options for later life.

“While many people looking ahead to retirement are hoping to access property wealth there are a significant number of retired homeowners who could also benefit from considering the role their property might play in funding their lifestyle,” the results explain. “Nearly two-thirds of people over 65 (70%) are dependent on the state pension as their main source of income and are also homeowners.”

This is even more pronounced than the important role played by Social Security benefits for American retirees. Roughly 40% of older Americans rely exclusively on Social Security for retirement income, according to 2020 research from the National Institute on Retirement Security, based on reporting from CNBC.

“The significant increase in house prices in recent years has likely shifted many people’s expectations of the role property wealth will eventually play in supporting their retirement,” said Claire Singleton, CEO of Legal & General Home Finance in a statement accompanying the results. “We anticipate that using your home to fund your retirement will become more commonplace in the future, whether that’s by downsizing to free up funds or releasing money tied up in your home through products like lifetime mortgages.”

U.K.-based equity release professionals recently offered new data about the trend of home equity implementation in retirement to virtual audiences at the National Reverse Mortgage Lenders Association (NRMLA) Virtual Annual Meeting in November 2021, describing a recent report detailing how the sentiment surrounding equity release in retirement appears to be improving across Europe.

Read the survey results at the LGHF website.

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